The New Delivery Paradigm and Tools of The Legal Trade

Mark A. Cohen
, ContributorI write about changes in the global legal marketplace.Opinions expressed by Forbes Contributors are their own.

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Until recently, lawyers needed just a few tools to ply their trade—legal knowledge, licensure, and clients. Good ones had a fuller kit—specialized skills and/or expertise, oratorical and writing proficiency, and a combination of intellectual and people smarts that elevated their client standing from lawyer to trusted adviser.

Lawyers today practice in a marketplace where licensure and ‘knowing the law’—without more-- won’t get them very far. A book of business is as important as ever, but maintaining it is another story. Rainmakers must do more than schmooze client prospects and/or position themselves to ‘inherit’ clients from retiring partners. The legal buy-sell dynamic has changed markedly during the last decade. In Facebook terms, it has morphed from ‘in a relationship’ to ‘it’s complicated.’ A quick look in the rearview mirror helps explain the client attitudinal shift and provides context for the evolution of legal delivery and the new tools of the trade.

Three Stages of Market Transition

The practice of law was once synonymous with the delivery of legal services. Lawyers were the sole providers, and they wrote rules proscribing by whom and how legal work was delivered. Law firms were the only game in town; clients had no options—apart from the friendly rivalry among firms whose ‘code’ prohibited partner poaching. The guild’s collegiality persisted until the mid- 1980’s when three events heralded law’s transition from clubby practice to cut-throat business.

The first change phase involved law firms. Finley Kumble shocked the legal world by offering huge signing bonuses and eye-popping guaranteed contracts to entice rainmaker partners to join them. 'The Finley Man' ushered in law's era of free agency and created the model for the modern firm. At about this time, the American Lawyer introduced its ‘AmLaw 200’ list, publicizing law firm financial information—notably profit-per-partner (PPP). The AmLaw survey highlighted financial differences between firms and quickly became—and has remained-- the law firm metric and as well as a catalyst for mergers and laterals. This coincided with Ben Heineman’s departure from BigLaw to head up GE’s legal department-- another watershed. Heineman elevated the status of corporate counsel and laid the foundation for enhanced in-house capability, influence, and financial reward. It was suddenly acceptable for a premier lawyer to work in-house.

The second phase of marketplace change occurred around the turn of the millennium when, as Tom Friedman noted, the world had become flat. Legal process outsourcing (LPO’s) and staffing companies--a precursor to the ‘gig economy’—emerged. Their model was initially premised on labor arbitrage—deploying less expensive labor sources to perform repetitive tasks. The disaggregation of legal tasks—peeling them away from law firms that had previously handled cases from start to finish—had begun. It was only a matter of time before disaggregation migrated up the complexity chain by combining labor arbitrage with technology. The urban myth that ‘law firms must perform all legal services’ was debunked, and this ignited investment in technology, process, and new delivery models.

The global financial crisis of 2008 produced law’s third phase of transition. Labor arbitrage was coupled with advanced technology and process management to create a more efficient, cost-effective way to deliver repetitive ‘legal’ tasks as well as more complex ones. This was accompanied by a shift in resource deployment; ‘gigs’ became an alternative structural and delivery option to ‘jobs.’ A handful of legal service providers—including in-house departments-- invested heavily in technology to routinize tasks and to integrate with the client’s operation . The new delivery paradigm was not simply designed to reduce cost; it was a fundamental reorganization of legal delivery. This had many salutary benefits for consumers including: compressing delivery time, mitigating risk, standardizing processes, and better aligning legal operations with the client enterprise. This new legal delivery model—a response to traditional partnership firm stasis—is designed to provide solutions to business challenges, not ‘legal problems.’